GMO's Predictions: A Useful Guide for Investors?
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How successful are stock market predictions? We explore one set of easily accessible predictions by a respected firm, GMO. Specifically, we evaluate how effective GMO’s predicted stock returns have been in guiding investors from June 2000 through March 2014. We find that the predictions have been useful, although based on past history investing solely in the top one or two performing indexes would have been an inferior strategy for maximizing return to investing equal amounts in the three indexes with the top predicted returns.
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Professor of Economics
Professor Tower specializes in finance, computable general equilibrium modeling, macroeconomics, development economics, microeconomics, and managerial economics. He conducts a majority of his research within the study of trade and development, exploring a variety of variables from tariffs, quotas, and time zone arbitrage, to equities, mutual funds, and index mutual funds. Since he began publishing his work in 1965, he has contributed over 130 articles to leading academic journals and has had s